The Australian Office of Financial.....>

AUSSIE BONDS: The Australian Office of Financial Management (AOFM) to sell

A$500mln of 2.25% May 2028 bonds, issue #TB149.

- The line was last sold on August 14, drawing an average yield of 2.6464%,

covered 4.85x. The issue has $18.8bln outstanding with a modified duration of

9.41 years.

- In the grey market the yield has fallen 2.5bp today to 2.659%.

- The AU/US 10-Year yield spread has risen 1.6bp today to 42.2bp as the US

market is hit by Trump political/economic turmoil. The spread has risen from

lows hit in early June of around 17bp and is just off a 2017 high of 46.2bp.

- ANZ note that "Australian 10 year yields are trading 2bp cheap to the average

of 2017, while US 10 year yields are 10bp rich on the same metric." While this

would usually be supportive of Aussie auctions the auction of the 3.25% April

2029 paper on Wednesday saw weak demand compared to previous issues. The issue

is slightly rich on the curve at -4bp on an ASW basis, but is near the high of

its recent range on a Z-spread basis at -4bp. Results due at 0200 London/1100

Sydney.